How I think we can reduce absolute poverty

There is no denying that poverty is an absolute cancer of society. The fact that even one person does not have the resources necessary to sustain life is categorically abhorrent, let alone millions. Some say that absolute poverty will always exist, but to that, I quote the prominent lecturer Charles Aked, who said that “the only thing necessary for evil to triumph is that good men do nothing”. As such, I have immortalised my musings on the matter below. I must stress, before I get to the proverbial meat of this article, that these are simply my thoughts on the topic, and I do not proclaim them to be unequivocally correct in the slightest. In actuality, I am welcome to any elucidations or critiques of my thoughts in the comment section below.

I shall commence by defining absolute poverty. The official United Nations definition is “a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information.” This means that, when a person is in “absolute poverty”, they cannot even afford or have access to the necessities of life, from food to proper education. In order to combat this, we should, firstly, increase public spending on education. A populace which is highly educated has access to a far greater variety of jobs in the tertiary and quaternary sectors, which are generally seen as synonymic with higher pay. If more people have higher pay, less people are below the threshold of absolute poverty and the populace is, in general, more prosperous. This leads to a chain reaction in which children have access to a greater sum of wealth than before, so they can give their children more money, and so on and so forth.

A “Living Wage” should also be introduced. I will define this as a wage that supplies the people with just enough money to have access to all the basic resources needed, such as food and water. The Conservative Party have just introduced this in the UK, however it has been said that this is far less than is actually needed to sustain a good standard of living, and some even go as far to say that this is all an elaborately concealed guise to take even more money from the lower earners of society. I say that the “Living Wage” proposed should be region specific, and should make sure that everyone from that particular region have access to the essentials of a basic livelihood. A “benefits” system encourages dependency, which, in my opinion, is not what a society should want. Aspirations should be kept to the highest level, so that productivity remains high and economic growth continues to transpire. Regardless, everyone does need the basic necessities, and ergo this living wage should be one of the axioms of an economy.

Progressive taxes should also be introduced, in which the more affluent in society should pay a greater proportion of their income as tax than the poor. By this method, income is redistributed from rich to poor, which, in turn, yields the consequence that less people suffer the wrath of absolute poverty, as the state are helping to entrust them with a greater standard of living. An example of this in the developed world is easy to find in Sweden, whose Gini coefficient (a measure of inequality in a country) is only 0.23. The difference in income between the highest and the lowest earners in this country is relatively modest compared to, say, the UK or the US. This redistribution of wealth shows that the people of Sweden do not have to struggle with poverty so much, as all of their wealth is relatively evenly spread out.

Finally, the state can help reduce unemployment by increasing their spending and lowering taxes. Lowering taxes means that people have more disposable income to spend, which increases aggregate demand for goods, meaning that producers have to increase the supply of these goods by hiring more workers. This, in turn, causes another chain reaction in which the economic growth of the country increases, and that less businesses go bankrupt and less jobs are lost. As more and more people have a wage to help their family sustain a good standard of living, poverty will reduce as more people have income to spend on their basic needs. This method will mobilise capital and labour, meaning that they are kept stagnant no longer and that they are used with more efficiency than previously. All these solutions combined, will, in my opinion, help to reduce absolute poverty. They will obviously not be able to completely eradicate it, however, these could definitely reduce its pertinence in modern society, in which it has no place at all.

By Shrey Srivastava

A finance and economics enthusiast, and someone who wants to share his views with the world.

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